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Professions divided over EU directive on money laundering

By Ian Fraser

The Herald

January 29th, 2007

ACCOUNTANTS and lawyers have split along professional lines in their response to the UK government’s proposed implementation of a European Union money laundering directive which must enter the statute books by December.

Last week solicitors warned that Westminster’s interpretation of the EU’s third money laundering directive, which is primarily intended to incorporate the funding of terrorist organisations into money laundering legislation, lacked clarity and will end up with solicitors being wrongly imprisoned.

But accountants are more comfortable with the proposed directive. Tom McMorrow, general counsel of ICAS, said: “I cannot see that what the government is proposing will cause any problems for our members or render them liable to prosecution.

“Overall, the due diligence requirements introduced by the EU’s third money laundering directive will be better than what we currently have. As far as CA firms are concerned, we don’t see anything that adds to the complexity of compliance. In fact, we welcome the third directive, as we believe it will simplify due diligence procedures.”

McMorrow acknowledged it is “conceivable” that a professional adviser could go to prison if the beneficiary of a trust turned out to be a drug-trafficker. But he said that case law suggests only advisers who plainly knew the beneficiary was a drug-trafficker, but turned a blind eye to this, could expect to spend time behind bars. “There’s a difference between neglect and wilful blindness,” said McMorrow.

ICAS’s stance is radically different to that of most lawyers. Last week Fiona Woolf, president of the Law Society of England and Wales, said the directive would “leave even the most conscientious of practitioners open to severe criminal sanction.” She argued it is unacceptable for the government to pass on to practitioners responsibility for interpreting the directive’s opaque language.

The Society of Estate & Tax Practitioners is urging the government to reconsider. Its chief executive, David Harvey, said: “Cabinet office guidance confirms that when criminal penalties are being created, it is often necessary for the government to implement with greater clarity and legal certainty.”

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